International Trade Secretary Liam Fox has insisted the Cabinet has not agreed a deal to allow free movement of labour for three years after Brexit.

Dr Fox said that any such move would “not keep faith” with the referendum result.

He told The Sunday Times: “If there have been discussions on that I have not been party to them. I have not been involved in any discussions on that.”

Chancellor Philip Hammond said there was broad acceptance in the Cabinet of a post-Brexit transitional period lasting up to three years (Dominic Lipinski/PA)

The intervention comes after Chancellor Philip Hammond said there was “broad acceptance” in Cabinet of a post-Brexit transitional period lasting up to three years.

He said this would mean “many arrangements remaining very similar to how they were the day before we exited the European Union”.

Mr Hammond said there would be a registration system in place for people coming to work in the UK after Brexit, during the transitional period.

“If they come here to work after we leave the European Union, during that transitional period, the sensible approach will be to seek to register people so that we know who’s coming and who’s going,” he said.

Dr Fox’s remarks came as an ally of Foreign Secretary Boris Johnson criticised Mr Hammond’s plans for a three-year transition period after Brexit.

Economic adviser Gerard Lyons said a two-year period would be better (Lauren Hurley/PA)

Gerard Lyons, who was an economic adviser to Mr Johnson when he was London mayor, said a two-year period would work better.

Writing in The Sunday Telegraph, he said: “Many of the ‘risks’ being highlighted about Brexit are perceived risks, not real risks. And a two-year transition would alleviate many concerns.”

Meanwhile, divisions in Labour over Brexit emerged as senior figures urged Jeremy Corbyn to commit to staying in the single market.

The Observer reported that opponents of quitting the single market may provoke a showdown at the party’s autumn conference by trying to force a vote on the issue.

Lord Kinnock believes participation in the single market or customs union or both for a transitional period is an option (Stefan Rousseau/PA)

Former leader Lord Kinnock told the newspaper: “The only way to mitigate the dreadful instability that will be costly for communities and industry is to try to ensure that, at least for a transitional period, we retain participation in the single market or the customs union, or both.”

Ex-lord chancellor Lord Falconer also backed staying in the single market, and TUC general secretary Frances O’Grady insisted the UK should not quit.

Writing in The Mail on Sunday, she said: “If there’s another way of getting a frictionless trade deal that protects jobs and rights at work, trade unions would love to know.”

Mr Corbyn has said that Britain would leave the single market on Brexit, while other leading party figures like shadow chancellor John McDonnell have said all options are on the table.